Re what Lola was saying...

... about there being hardly any free markets any more, I refer you to today's FT:

Vince Cable and George Osborne held a “banking brainstorm” at Number 10 on Wednesday with leading economists and industry experts to thrash out some of the possible ways of forcing banks to lend more...

The meeting followed a similar one at the business department between Mr Cable and Stephen Hester, chief executive at the Royal Bank of Scotland, which dealt specifically with lending to small and medium-sized companies. The two meetings marked the first drive of an effort to find ways to make banks lend, after the two part-nationalised banks, RBS and Lloyds Banking Group, missed their net lending targets under the previous government.

WTF are they playing at? Vince and George are the government - if they want businesses to have more money they could just tax them less. Instead of giving the banks £1 billion of taxpayers' finest and telling them to lend (which doesn't appear to be working), how about just cutting taxes by £1 bn? Let's not forget that raising that £1 billion in tax costs the economy > £1 billion; and has to be paid back (unlike a tax cut).

And if you're old enough to remember Altman's Z-Score (and assuming it to be broadly correct) you will know that retained/reinvested profits are given a higher weighting that pure share capital or loans, so a business that has grown organically out of retained profits is slightly 'better' than an otherwise identical one that has expanded more rapidly by issuing shares and debentures.